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Bitcoin rises

The rises of the Bitcoins

becca_morris
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Bitcoin rises

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  1. Bitcoin rises

  2. Now Bitcoin markets are trading at record prices of over $40. This increase, along with a series of recent developments, marks a new overall state of affairs for this project. To make better sense - beyond the mere market numbers - of the current state of the Bitcoin economy, it is worth it to make a brief recount of the way Bitcoin has evolved in recent months. Perhaps the most obvious milestone reached during the last few days is the surpassing of the previous top valuation of U$31.9, achieved by mid-2011. Bitcoin now trades at historically high prices above U$40 per coin. Is the bubble about to burst again? Those who expect a similar crash ought to consider that bitcoins from 2011 are hardly like bitcoins of 2013.

  3. Let's recap. In early 2011, the project started to get attention beyond a very reduced circle of people interested in cryptography. Due to its design (scarcity and floating value), bitcoins do tend to be the object of speculation, and a few online news articles was all it took at the time to drive prices, within a few weeks, from zero to over $30 per coin. However, there was no backing economic substance, no actual economic activity, markets with significant depth or use for the currency. This is why at the slightest sign of trouble - in this case, the hack of one of the exchanges - investors backed away, and the bubble popped. By late 2011, the price had retreated back to $2.

  4. Celebrating protocol One of the more subtle but profound events that took place in the past few months is a reduction by half in the rate at which bitcoins are produced. It is a characteristic of the bitcoin exchange protocol that such a change takes place every four years. This transition was baptised by the community of Bitcoin enthusiasts as "Halving Day". It was a significant event at several levels. Symbolically, "Halving Day" is a reminder of the built-in coin scarcity that is at the core of the Bitcoin economy. There was a general sense of excitement in online forums devoted to Bitcoin discussion in the days and hours previous to the "halving". Remarkably, "Halving Day Parties" were held in several cities: nothing less than the social celebration of a software function. A ritual was born from the code.

  5. In economic terms, though, the halving did in fact result in a drastically reduced number of new bitcoins, from 300 to 150 per hour. This severe cutback in production of new coins is likely to have been a factor, among many, in the recent price rises. This is why, in a remarkable demonstration of foresight, Bitcoin miners actually celebrated that their "pay" was being cut in half. Another reason why the "halving" was a significant event is that, being the first one since Bitcoin's 2009 inception, there was some expectation about how it would unroll, technically. Would the network assimilate the change seamlessly, or would it cause unexpected bugs to emerge, wreaking havok in the whole economy? The technical uneventfulness of this change at the protocol level of the Bitcoin network reaffirmed the confidence in the overall soundness of its design.

  6. Bitcoin-logic ventures Late 2012 has been a pivotal period for Bitcoin. Although the main indicator of the "financial" size of Bitcoin, the Bitcoin price, the key difference between Bitcoin's rise in price now and its bubble then is that in 2011 the Bitcoin markets' trade volume was backed almost entirely by speculation. (...) investors interested in Bitcoin are starting to look beyond the Bitcoin markets, and are instead increasingly focusing their eyes on the underlying Bitcoin economy - substituting mere speculation with increasing investment into the businesses that make both Bitcoin adoption and the Bitcoin price go up in the first place.

  7. Bitcoin Central account will have all of the core features of a standard bank account in Europe. Each account will have its own international bank account number (IBAN) with which anyone will be able to send money to that account via bank wire. On the withdrawal side, Bitcoin Central will soon issue debit cards similar to those now in the works by BitInstant that would automatically convert the holder's BTC balance to euros on the fly. And, finally, the euro balance of a Bitcoin Central account will be federally insured up to $100,000 by the French "Garantie des depôts."

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